NYPA trustees approve hydropower allocation for APP Pharmaceuticals

Low-cost power to support 5 other WNY businesses for 145 new jobs, $175
million in capital investments

The New York Power
Authority Board of Trustees on April 4 awarded an allocation of low-cost
hydropower to APP Pharmaceutical of Staley Road on Grand Island.

APP is among six
manufacturers in Erie and Niagara counties who have received the power in
return for their creation of new jobs and capital investments.

The allocations, to be
drawn from a block of electricity from NYPA's Niagara Power Project, also go
to: Yahoo! Inc., Lockport; Graphic Controls Acquisition Corp., Buffalo; I
Squared R Element Co., Akron; Niagara Coatings Services, Niagara Falls; and
Time Release Sciences, Buffalo.
Five of the six companies benefit from prior hydropower allocations that
have spurred their capital investments and creation of jobs, according to NYPA.

"Under Gov. Cuomo's
leadership, the New York Power Authority will continue to work with state and
local economic development agencies to maximize our low-cost hydropower
resources in support of efforts to revitalize the state's economy and, in
particular, Western New York," said Michael Townsend, chairman of the NYPA
board of trustees.

The latest allocations
provide for the allotment of 4,070 kilowatts from a block of Niagara
electricity known as replacement power, which is provided for under state law
for Western New York businesses committed to creating new jobs from expansion
projects. The allocations are to
be provided over five-year contracts commencing when the expansion projects are
completed.

APP Pharmaceuticals will
receive an allocation of 2,000 kw. The Grand Island Town Board discussed the
news at its board meeting on Monday. The allocation of power is part of a
package aimed at assisting APP in possible expansion on the Island.

Councilman Gary Roesch
said when APP purchased Astellas, its next-door neighbor to the east, in 2008,
Astellas already had an allotment of power from NYPA.

"Through negotiations with
the public service commission, the town, Empire State Development, (Erie County
Industrial Development Agency), they were allowed to access that power," Roesch
said. If APP can access about 5 more megawatts, the company would be able to
conduct new work at its GI location "that requires a tremendous amount of
power." The company would install new and used production equipment at the
Grand Island facility: heating, ventilating and air-conditioning system
upgrades, according to NYPA.

More work would lead to
the addition of about 50 more jobs to the Grand Island facility, Roesch pointed
out. The injectable pharmaceuticals manufacturing operations are expected to
take on an expanded role in handling some of the production of an APP facility
in Puerto Rico that the company closed.

APP's Illinois parent
company, Fresenius Kabi Pharmaceuticals Holding, had been considering two other
sites for the expansion, Roesch said.

Moving some operations to
GI would entail a 50,000-square-foot addition to combine two buildings on
Staley Road and would represent a total investment of about $28 million, he
said.

"That allotment of power
is part of the package that Empire State Development Corporation has put
together and has presented to APP to allow that additional work to be done on
Grand Island," Roesch said.

"If this goes through,
obviously it enhances the longevity of that facility, and right now APP employs
570 people."

Replacement power and
another large block of Niagara Power, referred to as expansion power, account
for more than one-third of the project's firm generating capacity, with the
electricity under the two programs reserved for companies within a 30-mile
radius of the facility or for businesses in Chautauqua County.

Late last year, long-term
NYPA contract extensions, beyond 2013, were approved for the more than 100
Western New York companies currently benefiting from Niagara hydropower. The
new contracts will help protect nearly 30,000 jobs and a combined annual
payroll of more than $2 billion and ensure capital investments of at least $150
million a year.

Other
Hydropower Allocations

Yahoo! will receive 1,000
kw of low-cost hydropower in support of its plans to expand its Lockport
datacenter operations to accommodate growth and move operations from overseas
and other states to its Western New York facilities. The project plan includes a capital investment of $130
million for a 120,000-square-foot expansion adjacent to existing facilities and
the purchase of new computer equipment, including data servers, routers,
storage devices and related hardware.

In May 2009, the NYPA
trustees had approved 15 megawatts of hydropower in support of the company's
plans to open a $150 million state-of-the-art data center in Lockport and
create 125 new jobs in the region. Just last September, Yahoo! celebrated the
opening of the data center. The more recent allocation supports the expansion
of the data center, which will be phased into full operation over a
three-to-five year period. As a result of the project, Yahoo! will create at
least 15 additional jobs with average starting wages and benefits of $55,000
per job.

"The expansion plans of
Yahoo! demonstrate how the Power Authority's resources can be the catalyst for
improving and diversifying the economy of Western New York," said John S.
Dyson, NYPA trustee. "Yahoo! has demonstrated its commitment to investing in
New York state and to continuing to add new high-tech jobs."